Comparing the two debt solutions

Both Bankruptcy and Debt Management Plans (DMPs) have very different processes. We’ve highlighted some key information below if you are looking into either of these options.

There are many differences between a Bankruptcy and a DMP:

These include:

Legal: Bankruptcy is a legal court order, but a DMP is not – it is an informal solution so there is less protection for you

Application: Bankruptcy is applied for directly via an official receiver from the Insolvency Service, but a DMP can be set up with any company providing them

Duration: Bankruptcy usually lasts around 12 months, but the length of a DMP depends entirely on the individual plan

Fees: Bankruptcy requires a fee of £680 to be paid. Fees for a Debt Management Plan vary between companies

Debts: Bankruptcy involves as much of your debts being paid towards through your assets as possible and the remainder is written off. A DMP involves you aiming to pay all your debts off in full

debt comparison

Qualifying Criteria


  • The £680 application fee needs to be paid in full before any proceedings commence
  • You must have assets of a certain value that may be sold to pay back your creditors
  • A creditor may apply for you to be made Bankrupt if you owe them £5,000 or more

Debt Management Plan

  • You should be able to demonstrate that you can afford a monthly payment after your living expenses and priority debts have been paid
  • You must be prepared to keep up payments to any creditors who are not included in your DMP and accept that it is at the creditors discretion whether or not they accept to be part of it
  • You must stick to the terms agreed in the plan set up with your provider

Can I switch to a Debt Management Plan if I’m Bankrupt?

A Debt Management Plan is informal, so you would be able to cancel this at any time if you wish to apply for Bankruptcy instead – you may wish to do so if your circumstances change for the worse and you are no longer able to afford your monthly payments.

If you apply for Bankruptcy, it’s also possible to get what’s called an ‘annulment’ and you would be left in the same position as you were prior to the application. This may be an option if your circumstances do change in a way that means you would be able to start making repayments to your debts and you would rather set up a Debt Management Plan.


What next?

If you are considering either of these debt solutions, it’s important to be well-informed of what each of them entails. Bankruptcy and Debt Management Plans aren’t the only debt solutions available – and it’s possible that neither is suitable for you. We recommend seeking debt advice through a trusted provider before entering either of these solutions.